Employer of Record (EOR) vs payroll outsourcing in Armenia: What’s the difference?
- Gegidze • გეგიძე | Marketing
- Aug 27
- 7 min read
Table of contents:
Quick definitions you can act on
You want a team in Armenia. Yerevan’s talent is ready.
The real question is who signs the contract.
If it’s you, you need an entity, and you carry the risk.
If it’s an EOR, they carry the employer burden.
Pick wrong and your start date slips.
What an EOR is in Armenia:
An Employer of Record in Armenia is the legal employer.
You lead the work. The EOR carries the legal load.
What it covers:
Compliant employment contracts and onboarding
Monthly payroll and statutory tax filings
Social contributions and benefits administration
Policy compliance and record-keeping
Terminations and offboarding support
Immigration help for foreign hires who need a residence permit basis
No local entity. One EOR provider in Armenia. Lower risk. Faster start.
What payroll outsourcing is:
You are the employer.
The provider runs calculations and submits filings for your Armenian entity.
What they handle:
Gross to net payroll calculations
Monthly submissions and payslips
Year-end payroll reports
What stays on your desk:
Contracts, policies, and terminations
Audit responses and any penalties if filings go sideways
How does the legal responsibility differ between EOR and payroll outsourcing in Armenia?
Who signs the employment contract? That’s who carries the risk. Simple as that.
With an EOR, they’re the legal employer, and you run the work
The EOR is the employer of record in Armenia.
You direct tasks, goals, and performance.
The EOR issues compliant contracts, holds personnel files, runs payroll and tax filings, administers benefits, and manages terminations the right way.
If an auditor calls, the EOR stands in front first.
With payroll outsourcing, you stay the employer, full stop
You need a local Armenian entity.
The provider processes calculations and submits filings for your company.
You own contracts, policies, terminations, and any disputes.
Late or inaccurate filings? Penalties land on your desk, not the vendor’s.
Want the full compliance checklist of what you must hold as the employer in Armenia?
PEO = co-employment for your existing entity. Shared HR admin, but you remain an employer. Entity required.
EOR = the provider is the legal employer for those hires. No entity needed for you.
How do costs compare for Armenian companies?
You’re choosing between a per-head subscription and a mini back office. The winner depends on headcount and how fast you need to move.
EOR cost model
Charged per employee per month.
What’s inside:
Compliant contracts and onboarding
Monthly payroll, tax, and social filings
Benefits administration
HR records, payslips, and standard letters
Guided terminations and offboarding
Support for immigration where needed
No setup projects. No banking hurdles. Your cost scales with headcount.
Entity + payroll outsourcing
One-time setup for your Armenian entity and registrations.
Monthly admin fee for payroll processing.
The provider runs calculations and submits filings.
You remain the legal employer and carry compliance, audits, contracts, and any penalties.
Where the break-even usually sits
Think in two lines:
EOR monthly = fee_per_employee × employees
Entity+payroll Year 1 = setup + (admin_monthly × 12)
Entity+payroll Year 2+ = admin_monthly × 12
Quick scenarios:
1–3 hires
EOR is typically cheaper in cash and faster to start.
You avoid setup, and the legal overhead lands with the EOR.
5+ hires, stable team
Entity+payroll can beat EOR on recurring fees.
You take on contracts, policies, terminations, and audit exposure.
Tip: forecast both paths for 12 months and 24 months. If you plan to scale later, start on EOR for speed, then switch once the team size and permanence justify the entity.
What are the key legal risks of choosing payroll outsourcing instead of EOR?
If your name is on the contract, you take the hit. Payroll outsourcing won’t shield you. It just runs the numbers.
The misclassification trap
Starting “contractor-first” feels lean. It isn’t.
If the role walks and talks like employment, expect scrutiny.
Reclassification can trigger back taxes, missed social contributions, interest, and fines.
You pay. Not the processor.
Contracts, terminations, and disputes
A payroll vendor won’t defend your paperwork.
Weak clauses, missing notices, or poor documentation invite claims.
You handle hearings, settlements, and reputational fallout.
The vendor keeps issuing payslips while you manage the mess.
Filings and deadlines
Processing help is not a liability transfer.
Late or inaccurate filings lead to penalties, even if the vendor erred.
You must correct returns, pay interest, and update records across the board.
Auditors will ask for your policies and personnel files, not the vendor’s.
Immigration exposure
Hiring a foreign national under your entity means you own the right to work.
If residence-permit status lapses, payroll compliance won’t save the employment.
You face sanctions or a forced work stoppage.
Policy drift and record-keeping
Rules change. So must your templates and handbooks.
If policies lag behind new requirements, you carry the risk.
Keep airtight archives for contracts, leave, and time records. Auditors will check.
Why EOR avoids most of this
An EOR is the legal employer. They issue compliant contracts, handle payroll and filings under their employer status, lead terminations, and front audits. Your team still reports to you, but the legal blast radius sits with the EOR.
How quickly can a business establish or switch between EOR and payroll services in Armenia?
You want start dates, not delays. Here’s how fast each path really moves.
If you choose EOR
Typical timeline: Days, not weeks.
What happens
Kickoff and KYC
Role details and comp confirmed
Compliant offer and contract issued
Payroll profile created
Benefits set
Start date locked
What you prepare
IDs and basic employee data
Salary, allowances, probation terms
Preferred start date
Where delays creep in
Late documents
Complex allowances that need policy approval
Last-minute contract edits
Good to know
No entity. No bank setup. No local registrations.
Immigration support is available for foreign hires if needed.
If you choose entity plus payroll outsourcing
Typical timeline
Weeks, not days. Plan for banking, tax registration, and internal policy work.
What happens
Company registration and tax IDs
Bank account and signatories
Payroll provider onboarding and test run
HR policies finalized
First payroll scheduled
What you prepare
Company docs and local signers
Employment templates and handbooks
Bank details and payroll calendar
Where delays creep in
Bank due diligence
Missing HR policies
Data migration for existing staff
Switching scenarios
Payroll to EOR
You want speed or you want to reduce risk.
Notify staff and set a transfer date
Terminate from your entity with the correct notice
Rehire via EOR on a compliant contract
Transfer benefits, leave balances, and equipment rules
Line up payroll cutoffs so no one misses a paycheck
What stays the same
Manager, duties, salary, perks
Day-to-day reporting
What changes
Legal employer on the contract
Who carries filings and audits?
EOR to payroll after you set up an entity
You built the entity and want ownership back.
Open the entity payroll and confirm the bank signers
Novate contracts to your entity or reissue new ones
Port HR files, leave balances, and benefits
Switch payroll on a clean cutover date
You now own all employer obligations
Cutover checklist you can copy
Staff communication and FAQs
Final payroll under the old model
First payroll under the new model
Contract signatures and IP clauses verified
Benefits continuity confirmed
Access, equipment, and policy acknowledgments updated
There are two main paths, EOR vs setting up an entity in Armenia. If speed and low admin matter, EOR wins. If you want full control and have a stable team, entity plus payroll can work.
What scenarios make EOR the better choice over traditional payroll services in Armenia
You want a team in Armenia now. Paperwork says “wait.” EOR says “go.”
No entity needs to hire now
EOR issues the contract and becomes the legal employer.
Payroll, taxes, and records handled from day one.
You manage work. We carry the employer load.
Perfect for first hires, pilots, and fast market tests.
Foreign hires who need a residence permit
EOR sponsors the employment basis and files the registrations.
Right-to-work stays clean. Start dates stay firm.
Payroll outsourcing can’t fix immigration. It only pays people.
One invoice, minimal admin
Single provider. Clear monthly fee.
Contracts, payroll, filings, terminations—bundled.
Add perks, equipment rules, and workspace options without building a local back office.
When payroll outsourcing is enough
You want clean payroll runs. You are fine being the employer. This is your lane.
You have a registered Armenian entity
You need calculations, filings, and payslips only
Your bank and accounting are set
You understand payroll cutoffs and calendars
You are comfortable owning the legal side
You issue contracts and keep them current
You handle terminations and disputes
You answer audits and update policies when rules change
If a filing is late or wrong, you accept the penalty risk
Team size and permanence justify the overhead
You plan a steady headcount in Armenia
You want in-house control of policies and culture
Recurring admin beats per head EOR fees once you pass a few hires
You are building for the long run
What to have in place before you choose payroll outsourcing
Solid employment templates and handbooks
Clear approvals for salary changes and bonuses
A point person for audits and regulator questions
A tidy archive for contracts, leave, and timesheets
When to rethink
You need to start in days, not weeks
You plan to hire foreign nationals who need a residence permit
You do not want to manage contracts or terminations
If you nodded through the lists above, payroll outsourcing fits. If not, EOR will save time and reduce risk.
Comparison table
Conclusion
You want hires in Armenia without drag. Pick the path that fits how you work.
Choose EOR when you don’t have an entity, need speed, or plan to hire foreign talent who needs a residence permit. Liability sits with the EOR. Your start dates hold.
Choose payroll outsourcing when you already have an Armenian entity and you’re happy owning contracts, terminations, audits, and policy updates. It wins once your team is a few heads and steady.
Send us your headcount and dates. We’ll map each role to the right setup, show total cost, and lock in a go-live.
